LEASE AGREEMENTS that businesses have
entered into with a developer of a former US air base in Baguio City “have been
terminated,” said the head of a government-led corporation tasked to develop
facilities left behind by the US military.

“Whatever agreement they (investors)
entered into with CJH Development Corp. (CJHDevco) no longer applies because
their subleases have been terminated with the principal lease,” Mr. Arnel
Paciano D. Casanova, the President and Chief Executive Officer of the Bases
Conversion and Development Authority (BCDA) told a media briefing on Friday in
Taguig.

He made these remarks a day after the
state-led corporation issued a statement saying that the Sobrepena group --
which secured the contract to develop Camp John Hay in Baguio City -- should
vacate the premises within a month. BCDA also told all tenants and stakeholders
to coordinate with the government for the evaluation of their contracts.

“Under the rules, in one month they
should turn over the property. Actually they should start now -- they should to
that willingly and immediately,” Mr. Casanova said.

In a Feb. 11 decision, the arbitration
committee in Baguio City ordered Sobrepena-led led CJH Development Corp. to
vacate Camp John Hay after failing to pay the government corporation lease
rentals and arrears, which reached over P3.4 billion.

Of this amount, P850 million should
have gone to the local governments of Baguio, La Trinidad, Itogon, Sablan, Tuba
and Tublay, BCDA said in a press statement yesterday.

At present, Camp John Hay houses are
around 85 residential structures, 384 hotel rooms owned by private individuals,
and a total of 118 business enterprises, restaurants, shops and business
process outsourcing offices, John Hay Management Corporation (JHMC) President
and Chief Executive Officer Jamie Eloise M. Agbayani said in the same briefing.

Mr. Casanova continued: “CJHDevco has
been ordered to vacate the property and they should do so immediately. We want
to ensure security in Camp John Hay and prevent sabotage, pilferage and the
destruction of property.”

He noted that Camp John Hay must be
turned over “in good and tenantable condition.”

The arbitration committee is chaired
by Mario E. Valderrama, while Teodoro Kalaw IV and Rogelio C. Nicandro served
as co-arbitrators.

BCDA, CJHDevCo both in breach of
lease, arbitration says

In rescinding the lease agreement and
two subsequent memoranda of agreements, the Philippine Dispute Resolution
Center, Inc., ordered BCDA to pay back the P1.42-billion rent CJHDevCo paid
since 1998.

In a 274-page ruling, the arbitration
panel also cleared CJHDevCo of its liabilities for any unpaid back rent
“consistent with the ruling that rescission and mutual restitution is proper in
this case.”

Having chosen to rescind the
agreement, the panel denied the plea of both parties for damages because “both
parties are mutually in breach of the lease agreement.”

The tribunal found that BCDA breached
its undertaking to set up a One-Stop Action Center, which would have expedited
the release of permits. It also sided with CJHDevCo’s claims that the agency
failed to deliver on promises of investor-friendly incentives and the
advantages of a special economic zone, such as preferential financial
incentives and cutting down on bureaucratic red tape.

Meanwhile, it also found that CJHDevCo
failed to pay its rent on time. It also said that the company made “material
misrepresentations as to its financial capacity to pay rent” and failed to set
up an escrow account.

“Having found that both parties were
guilty of breaches on matters that are causal in nature, in addition to our
finding that there was mutual mistake on the part of the parties, then we find
that mutual rescission is warranted. And, as both parties are at fault, then
their respective faults cancel each other such that both parties should be
considered in good faith,” the arbitration panel ruling said. -- Vince Alvic A.
F. Nonato and Daphne J. Magturo